Learning Networks as a Means for Work Organization Development

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The relatively favourable overall growth of productivity in Finnish economy in recent years conceals the fact that there are remarkable sectoral differences in productivity development. The rapid productivity growth in sectors which produce information and communications technologies (ICT), such as the electrical and electronics industry, is contrasted with slackened growth in most other industries. Finnish companies’ overall record in turning the new technological opportunities permitted by advanced ICT into gains in productivity has been relatively poor. This indicates that many companies have not managed to implement sufficient improvements in their work and human resource management (HRM) practices to achieve synergistic effects of combined use of ICT and new......

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Learning Networks as a Means for Work Organization Development Recent Finnish Experiences Tuomo Alasoini Finnish Workplace Development Programme Ministry of Labour tuomo.alasoini@mol.fi Paper prepared for the Nordic R&D Conference on University and Society Cooperation, Ronneby, 14-16 May 2003
1 Introduction Finland is now considered one of the most competitive industrial nations in international comparison. Finland’s performance in innovation also enjoys a high reputation. According to the EU Innovation Scoreboard 2002, Sweden and Finland are the two innovation leaders among the EU Member States (www.trendchart.cordis.lu/Scoreboard2002/index.html). By a closer look, however, Finland’s good performance is mainly based on achievements in the area of technological development and innovation. This is one of the main conclusions of the Science and Technology Policy Council of Finland (2003) in its newest triennial review. The review examines the main challenges facing research and innovation funding and it contains a list of policy recommendations for the future. It states, “Technological development and technological innovations are generally considered the strongest area of Finnish innovation. /…/ Well-deserved attention has begun to be paid to the relative weakness of social innovation in the entity of innovation. Its development alongside technology is a major challenge for society and for the economy. As yet Finland has no clear development strategy for social innovation. The challenge concerns both the organizations responsible for social development, the development of working life, and the safeguarding of individual development and opportunities by means of research-based innovations.” From the point of view of work organization development policy the unbalanced development of technological and social innovation can be seen as follows: (1) The relatively favourable overall growth of productivity in Finnish economy in recent years conceals the fact that there are remarkable sectoral differences in productivity development. The rapid productivity growth in sectors which produce information and communications technologies (ICT), such as the electrical and electronics industry, is contrasted with slackened growth in most other industries. Finnish companies’ overall record in turning the new technological opportunities permitted by advanced ICT into gains in productivity has been relatively poor. This indicates that many companies have not managed to implement sufficient improvements in their work and human resource management (HRM) practices to achieve synergistic effects of combined use of ICT and new forms of work organization. (2) There is no clear evidence indicating of a positive association between the extent of the use of ICT and the improvement of the quality of working life (QWL) at company or workplace level in Finland. The new technological opportunities have been so far insufficiently utilized as a means to deliberately improve work processes, work organization and work designs from the QWL point of view. Finland is not alone among the industrial nations with these problems. Though industry- and plant-level survey data from various sources indicate that superior productivity gains usually are a combined effect of new technologies and supplementary management and work organization innovations (e.g. Antila and Ylöstalo 1999; Breshanan et al. 2002; Gjerding 1999; Kumar 2000; Lewis et al. 2002), work organization development as such has so far played only a minor role in public-policy decision-making, especially when compared to the development of new product and production technologies. For instance, Brödner and Latniak (2002) found out that only seven of the 15 EU Member States had ongoing public-supported work organization development programmes in 2002.
2 This paper outlines a fresh approach to work organization development which utilizes learning networks as a means for disseminating and generating knowledge of new practices, and examines opportunities for this approach in Finland by looking at university-industry cooperation. University-industry cooperation in Finland is analysed with the help of experiences of the Finnish Workplace Development Programme (1996-2003). The last part of the paper examines learning networks as a model for interaction and cooperation at four different levels. Towards a New Approach in Work Organization Development Bases for Innovation-Promoting Work Organization Development Typical goals of the ‘first-generation’ of work organization development programmes dating from the 1960s to the 1980s included improvements in job contents, working conditions, work environments, employees’ opportunities for participation and labour-management relations (Den Hertog and Schröder 1989). The two main weaknesses with these ‘first- generation’ programmes were that the objects of development were often perceived as abstract and unattached to strategic business goals by management and that the programmes lacked effective means to communicate and disseminate project outcomes to other companies. Their poor record in these two respects can be contrasted with the simultaneous success of the Japanese quality movement in improving performance of Japanese companies (Cole 1993). Maintaining and strengthening the social legitimacy of work organization development policy in today’s globalizing and increasingly networked economy calls for an approach, which explicitly focuses on the promotion of productivity-boosting organizational innovations. Work organization development designed specifically to promote innovations differ by its strategic goal-setting from its predecessors, which were designed specifically to promote QWL and employee participation, but it can be linked to their value basis in two ways: (1) Innovations provide a way to boost productivity and thus to improve the competitiveness of companies and economic growth in general. Countries, regions and companies which are unable to compete in the field of innovations are in danger of losing their strategic room for manoeuvre in global competition. They will then be forced increasingly to seek their competitive advantages in lowering the costs of traditional production factors such as labour. On the corporate level, this has the long-term effect of undermining the job security of the employees, making atypical employment more widespread and reducing companies’ interest in developing the competence and skills of their employees. For society as a whole, the threat lies in a weaker financial base for social expenditure and a growing economic and social gulf between different population groups. The consequences could easily be a self-perpetuating vicious circle which would be hard to break. Maintaining good QWL calls for a sound growth of productivity which is based on organizational innovations. (2) Promotion of innovation activity within companies makes them more interested in improving employees’ opportunities to contribute to development work. In this respect, the Japanese quality movement provides both a good and a bad example. It is good in the sense that it became in effect a mass movement for quality improvement in Japanese companies. It is, however, a bad example in the sense that it did not, in fact, break down the hierarchical decision-making structures within companies and lead to industrial democracy, giving rise instead to a development organization (e.g. quality circles) which existed parallel to the
3 production organization (Lillrank 1995). By contrast, in the Nordic countries, where the responsibility for planning and development activities has recently been delegated to employees and teams within the production organization, work organization development aimed at boosting innovation has much better chances of further speeding up this line of development. The Role of External Expert Knowledge in Work Organization Development Attempts to develop work organization can take many forms. Figure 1 presents these different means in a two-dimensional diagram. The x-axis illustrates the intensity of the role of external expertise in the change process, while the y-axis illustrates the relationship between expertise and practical knowledge (i.e. knowledge that management and employees possess) in achieving change. Typical traditional methods of work organization development include the ready-made expert solutions at one end of the x-axis (legislation, agreements between the labour market organizations, norms, standards and blueprinted consultancy ‘change packages’) and the dissemination of information at the other end (research reports, method guidebooks, databases, etc.). What these two methods have in common is that the outside expertise and in-house practical knowledge never meet during the actual process of change. Figure 1. Different roles of external expertise in work organization development. Expertise and practical knowledge in interaction Participatory development Expertise Company- Expertise indirectly guides Advisory specific directly guides process of change services expert process of change solutions Training programmes Ready-made Dissemination expert of information solutions Expertise and practical knowledge unconnected The potential for influencing change processes using these methods alone has dwindled in recent years. Meanwhile, the importance of the methods in the upper right-hand corner of figure 1 has correspondingly grown. There are two reasons for this. Firstly, the pace of change in the companies’ operating environment has accelerated and the issue of work organization is increasingly becoming a reflexive topic, which is subject to continuous discussion and redefinition. If external expertise is really to have any impact under these circumstances, it must have a strong enough role in the actual process of change itself. This is the justification for its position on the right-hand side of the figure. At the same time, companies’
4 development challenges have become more complex as a result of globalized competition, networked economy and the rapid advances in ICT. Their main focus of attention is no more on renewal of individual business processes, but, increasingly, on continuous development of the entire product and business concept (Virkkunen 2002). This has also reduced the potential for solitary actors to find solutions to emerging problems, let alone to define the problems themselves properly. In order to make proper definitions or to find successful solutions, it is increasingly important that there is interaction between different types of knowledge. This, in turn, justifies the position at the top of the figure. The methods placed at the top right of the figure are company-specific expert solutions and participatory development. These two methods also describe the typical role of expertise in work organization development programmes. The division between these two methods broadly corresponds with the division into a design-oriented and a process-oriented approach (Naschold 1993). Design orientation applies here to cases where external expertise is mainly used to explore the possible future states and features of the organization on the basis of theories or models of ‘next-generation’ organizations or other good-practice design criteria and diagnosis of the current state of affairs in the organization, whereas in process-oriented approach external expertise is used to assist the organization to find proper ways to implement participatory processes of change on the basis of theories or models of change and intervention. In innovation-promoting work organization development, this division should be bridged. Seeing work organization as a reflexive topic lays increased stress on process- oriented approaches. Increased reflexivity does not mean, however, that the company’s room for manoeuvre is no more bound by its current state of affairs and its own historical and other contextual factors, i.e. also expertise in design issues is still highly important. The methods placed at the top right of the figure also create better opportunities than the other methods for mutual, interactive learning for both experts and practioners. Involvement of experts in actual processes of change and their interaction with practioners promotes their opportunities for reflective observation and abstract conceptualization of the change processes, resulting into new models, methods and tools for development work. From the point of view of companies, dialogue with experts helps them, in addition to solve practical problems, improve their capacity to solve future problems. From Best Practices to Learning Networks In traditional approaches of work organization development programmes, the aim is first to identify ‘best practices’ through experimentation within a group of companies, and then to transplant these to other companies. The problems of these approaches have been dealt with by a number of writers (e.g. Fricke 1994; Gustavsen et al. 2001; Lillrank 1995; Wareham and Gerrits 1999). For instance, the causal mechanisms through which the adoption of different practices lead to improvements in company performance are complex and context-bound, and the acquisition of these practices is not a case of a mechanical transfer of information; it is always a creative learning process in the company in question. One possible solution to the problem of accumulation of knowledge would be to abandon the idea of ready-made best practices and that of disseminating these practices afterwards. According to the new approach to work organization development, enough companies should be included in programmes and projects from the very start and companies should be networked together and also with expert organizations. A large enough number of companies
5 and expert organizations might be termed critical mass. Setting up solid channels for the exchange of experiences and actual development cooperation within this critical mass can facilitate the creation of learning networks. The term ‘learning network’ refers here to a cooperation forum between companies and expert organizations based on equal participation and confidential exchange of information and experiences which is intended to help companies define their development needs and find solutions to their problems. The expert organizations involved in such networks are typically research and educational institutions, consultancy companies and development agencies. These networks may take many forms and may also include other participants, such as customers, labour market organizations, intermediate-level organizations, etc. They may be open or closed. They may have a reasonably permanent structure or a constantly changing one. They may have both permanent members and loosely connected contributors. In many countries, learning networks have been actively promoted in recent years through various development programmes and projects (e.g. Alasoini 2001; Bessant and Tsekouras 2001; Gustavsen et al. 2001; Tell 2001) with the aim (1) to improve the potential for individual companies to carry out projects successfully (if critical mass has been achieved within projects and programmes, it improves the chances of successful development and lasting results); (2) to improve individual companies’ chances of receiving inspiration, ideas and encouragement to develop (the more critical mass projects and programmes have, the better the chances of companies using comparisons to understand their own situation better and thus to support their own development); and (3) to boost the search for new, innovative solutions (the more interaction there is between different points of view within projects and programmes, the better the chances will be of finding fresh outlooks). Also in work organization development according to this approach it is possible to talk of good or best practices. The notion in this case, however, does not refer to ready-made, transferable solutions; it refers to practices as generative ideas, which serve as sources of inspiration for companies. Universities as Partners of Companies Different types of network can be effective in different situations. In cases of learning involving the search for solutions to problems which are already fairly well defined, it is useful if the network participants and their knowledge base are similar to each other. With the help of adaptive learning of this kind it is possible for the participants to find solutions without needing to question norms and basic assumptions guiding their activity. In cases where the focus is on defining the actual problems, differences in knowledge between the participants can be a resource in itself. This calls the participants for the kind of generative learning which does enforce them to critically assess their own norms and basic assumptions. Since both types of learning are often needed, the best situation could be ‘just the right difference’ between the network participants (Nahapiet and Ghoshal 1998; Schienstock and Hämäläinen 2001; Tell 2001). This helps enrich the knowledge base of the network but still leaves the participants able to understand each other’s fundamental issues, targets, language and value judgements. Figure 2 takes a closer look at this issue, from the point of view of adaptive and generative learning separately. The underlying assumption here is that the opportunities for learning by the different network participants are a function of the difference in their knowledge base.
6 This has an effect on their learning opportunities through two components: the ease of information exchange and the novelty of information exchanged. The ease of information exchange decreases with the increase of difference in the knowledge base of the network participants. The novelty of information exchanged, instead, increases with the growth of difference in the knowledge base of the participants. The two inverse U-shaped curves in figure 2 depict the joint effect of these two components. In adaptive learning the optimum point of difference is probably to the left from the optimum point in generative learning. Figure 2. Opportunities for learning and the difference in the knowledge base of the network participants. Adaptive Generative Opportunities learning learning for learning Difference in knowledge base Innovations often call for posing entirely new questions or redefining old ones, i.e. generative learning. This means that innovation-promoting work organization development should focus on creating and supporting learning networks with actors with relatively wide differences in their knowledge base. Innovation-promoting work organization development, therefore, is an area in which researchers are supposed to have an advantage over consultants as development partners of companies, owing to their basically critical scientific approach towards the ‘reality’. It is an open question, however, whether scientific communities are ready and willing to expand their role in an area in which they are forced in a constant search for a satisfying balance between their own scientific norms and standards and the expectations of different groups of practioners. Companies and universities constitute two different communities of practice with two different logics of operation. Even in the Nordic countries with their high reputation for well-functioning ‘national innovation systems’ and their long tradition of work organization development programmes, university-industry cooperation in issues related to the work organization is much of an unexplored area for many companies, let alone universities (Gustavsen et al. 2001; Nieminen and Kaukonen 2001; Svensson et al. (Ed.) 2002; Tell 2001).
7 University-Industry Cooperation in Finnish Work Organization Development – the Case of FINWDP Network Projects The Finnish Workplace Development Programme (FINWDP) is the first of its kind in Finland in terms of its conceptual foundation and scale, i.e. it is a national initiative in which the focus is on work organization development. FINWDP was launched at the beginning of 1996 as part of the programme of Prime Minister Lipponen’s first administration, and will continue until the end of 2003 under the programme of the second Lipponen Government. The aim of the programme is to improve productivity and QWL by promoting new work and HRM practices in Finnish workplaces. FINWDP is funded by the Finnish Government. The total budget of the programme from 1996 to 1999 was EUR 16 million, and EUR 28 million for the second programme phase from 2000 to 2003. The programme can provide expert support to workplaces. Expert support is used mainly for funding the use of researchers or consultants in the projects. 1,300 workplaces and 120,000 employees in 550 development projects have so far taken part in the programme. The main goals of the projects include the development of work processes, establishment of teams and groups, and improvements in leadership, personnel management, external networking and the functioning of workplace communities. About a third of the programme budget is earmarked for networks projects of a special kind. This funding is intended for research and experimentation to support the creation and testing of organizational innovations that have a potential for job creation. The projects must involve a sufficient number of companies in close and open cooperation based on mutual trust. Cooperation between companies can be based on vertical (production) or horizontal (development) networks. Vertical networks can be further divided into principal- and supplier-driven networks, and horizontal networks into topic-, region- and sector-based networks. Most network projects are jointly funded by FINWDP and other R&D funding sources such as the Technology Development Agency Tekes. The following takes a look at network projects with regard to their potential to act as learning networks. Network Projects as Learning Networks So far FINWDP has supported 33 network projects, a half of which have been completed. 20 of the projects are horizontal networks, and most of them (N=17) are primarily topic-based. Where vertical networks are concerned, there are more supplier-driven networks (N=7) than principal-driven ones (N=5). The first type is typically a case of several small or medium- sized supplier companies led by one or two ‘core’ companies in trying to create system supplier capacity for their mutual production network through intensifying their cooperation. There is one network project, which does not clearly belong to either of the two above groups. This project aims to create technological and organizational infrastructure for networking between a group of workplaces. There is only one project in which the primary justification is that it is regionally based, but about ten projects have this as their secondary justification for networking. Metal and engineering industry companies have participated more actively than anyone else in network projects. One third of the projects consist only of such companies, and they are also involved in many other mixed projects. The other most active participants include the mechanical wood-processing industry and the electronics industry. The total number of
8 participating companies is from 250 to 300, depending on the precise definition of ‘participation’. Most of them are SMEs. Table 1 shows how extensively different kind of actors take part in the network projects. In 15 projects, the development coalition comprises only a group of companies and an individual expert organization. The other extreme is demonstrated by two projects in which one can find as many as six different types of actors involved. Of all expert organizations, research institutes (N=15), technical universities and faculties (N=14) and consultancy firms (N=11) are the most active participants in the projects. The distribution of expert organizations in Table 1 seems to correspond to the situation in Finland on the whole. Nieminen and Kaukonen (2001) have conducted a survey of how important companies consider innovation- related cooperation with different partners. Based on their material (374 companies in manufacturing and knowledge-intensive business services), the companies considered cooperation with their own client companies, equipment suppliers, material suppliers and subcontractors fairly or very significant clearly more often than with any other partners. 31% of the companies also considered cooperation with research institutes such as the Technical Research Centre of Finland (VTT) to be important. Cooperation with private consultancy and development agencies (28%) and technical universities and faculties (23%) was considered more important than cooperation with polytechnics and other educational institutes (21%). Meanwhile, the figure for universities was only 12% and for schools of business administration only 3%. Table 1. Development coalitions and different types of participants involved in FINWDP network projects. Number of different types of participants 2 3 4 5 6 TOTAL Companies 15 7 7 2 2 33 Research institutes 4 4 6 1 15 Technical universities and faculties 6 2 3 2 1 14 Consultancy firms 2 3 4 1 1 11 Educational institutes 2 2 1 1 6 Universities 2 2 1 5 Development agencies 1 2 1 1 5 Public-sector workplaces 1 1 1 2 5 Polytechnics 1 1 2 Residents 2 2 Schools of business administration 1 1 Rehabilitation institutes 1 1 Organizations of entrepreneurs 1 1 The number of different types of expert organizations involved, the number of companies involved, their variation by factors such as industrial sector and size, and the project duration are some of the most critical structural characteristics depicting the ability of a project to function as a learning network. In actual fact, a project’s ability to function as a learning network depends on many other factors too, as for instance the forms of interaction between different participants in the course of the project, how advanced the methods are that the project applies and how committed the various participants are to the project.
9 The following includes short descriptions of three network projects which demonstrate aspects of learning networks. They also constitute examples of three different kinds of networks, a horizontal (The Lohja Area Environmental Cluster), a vertical (The VAVE Network) and an infrastructure-creating network (The TEL LAPLAND Network). Case I – The Lohja Area Environmental Cluster The Lohja area is an old industrial area in western Uusimaa province in southern Finland. The Environmental Cluster comprises 18 local companies, the organization Entrepreneurs of Lohja, the Lohja Hospital District and the City of Lohja itself. The companies involved are among Finland’s leading corporations in the paper, wood processing, electronics and building materials industries and in energy production. The University of Helsinki’s Länsi-Uusimaa Institute for Continuing Education acted as coordinator in a project (1999-2002), which gave rise to the establishment of the Cluster. Various subprojects have brought also many consultancy firms into the Cluster. The Environmental Cluster is intended to launch and implement projects that aim to improve the state of the environment in the Lohja area, to create cooperation in environmental issues between authorities, companies and local residents, and to increase and utilize environmental know-how in the area. It is hoped that cooperation will help find solutions and operating models that reduce environmental impacts arising from raw material acquisition, energy use and the manufacture, transport, distribution, use, recycling and disposal of various products. The Cluster was a consequence of a competitiveness analysis of the area, carried out by a local partnership project in 1998. This showed that efficient handling of environmental issues was an important factor for companies’ competitiveness and for that of the area as a whole. The Cluster is an open learning network seeking to expand. Specific rules were set down right at the outset, covering decision-making, the implementation of subprojects, funding, agreements and internal and external provision of information. The companies have formed clubs amongst themselves for the personnel in charge of environmental issues, logistics, information and acquisitions, and for technical staff. The operations of the Cluster have been aimed at both local residents and company personnel, and have taken the form of environmental and company surveys, training seminars, visits, joint development projects and various other events, such as a car-free day and a car-pool day. The companies’ joint development projects focused on reducing the environmental impact of logistics chains, on more effective waste recycling, on efforts to boost the user value of Lohja lake, on developing environmental indicators and on working together on developing environmental management systems. The Environmental Cluster is still operating even after its specific project funding ran out in 2002, and it has made deliberate efforts to assess and develop its own capacity to act as a learning network. Case II – The VAVE Network The VAVE Network is a cooperation forum for the Tampere unit of Sandvik Tamrock Oy, which manufactures drill rigs, and eight of its suppliers. The Network seeks to develop the competitiveness of the entire network through improved cost effectiveness, shortened throughput times and better delivery accuracy. The acronym VAVE comes from ‘Value
10 Analysis – Value Engineering’, a method originally developed in the automotive industry. Value Analysis means continuous improvement and Value Engineering means cost awareness in product development. The method is based on a continuous improvement programme for supplier companies which is supported by the core company and includes training, all with the ultimate aim of cutting out the ‘slack’ in the value chain. In the Finnish version of this method, the cooperation between companies has been expanded from bilateral cooperation between one core company and one supplier into multilateral cooperation between several companies within a network. The VAVE Network is thus a unique opportunity for many of the subcontracting and supplier companies in the network to access top-level expertise tailored to their specific needs. The Network has a vision, strategy and organization for its development work. Cooperation within the Network is based on a framework of joint development seminars and multilateral and bilateral development projects between the companies. The development projects have focused on issues such as joint acquisition of paints, cost accounting and cost awareness, demand forecasts and order procedures, electronic information exchange between the core company and suppliers, involvement in the product development process of the core company and cooperation among the suppliers. The joint projects have helped intensify cooperation between the companies and boosted the competitiveness of the entire Network, for instance in terms of better cost effectiveness in purchases and more reliable deliveries. The core company has a special VAVE team and each supplier company has a VAVE coordinator. External support for the Network’s discussions, training and development has been provided by the Industrial Systems Unit of VTT Automation and Tampere University of Technology’s Institute of Industrial Management, Institute of Machine Design and Centre for Continuing Education. In addition to FINWDP and the companies involved, a special project that contributed to the creation of the Network was funded by Tekes, the European Social Fund and Pirkanmaa Employment and Economic Development Centre.. After the end of the VAVE project itself in 2001, development cooperation between the companies continued within the production chain using the companies’ own resources. Case III – The TEL LAPLAND Network The TEL LAPLAND Network is based on a project which started in 1997 with the aim of creating Finland’s first overall system of telemedicine (video training and consultation, radiology, primary care, ophthalmology, transfer of ultrasound and digital transfer of ECG) in Lapland between the Sodankylä Health Care Centre, the Lapland Central Hospital and Oulu University Hospital. The project started in the form of cooperation between the Lapland Hospital District, the Development Centre for Telemedicine and the Work Science Unit at the University of Oulu, the Rovaniemi Polytechnic and a group of equipment manufacturers. In Lapland, which is sparsely inhabited, with great distances, there was a need for new methods which could help create seamless service chains and improve access to health care services. The Oulu region, meanwhile, has a strong concentration of expertise in ICT, one of whose specializations over the past few years has been medical solutions. From the very start, the project included a study of the introduction and usability of the subsystems and equipment involved. The study focused on the impact of different alternative solutions on patients’ experiences of care, the productivity of work, the working environment, ergonomics and the wellbeing of personnel. The ultimate aim of the study was to develop new
11 innovative working methods and services and produce feedback for the manufacturers of the equipment and systems. Personnel training was also provided when each subsystem was introduced. In 2000, it was decided to expand the project to cover all 16 municipalities in the Lapland Hospital District by the end of 2003, and in 2002 the Lapland University joined the Network as the Network decided to launch an evaluation study to monitor and support the introduction and establishment of new operating methods at the units involved. The project functions as a learning network, in that each health centre has a multiprofessional project team which is responsible for project implementation at its health centre and works on developing services in cooperation with other health centres and project teams at the Central Hospital. The aim is to productize the new ICT-based services created by different pilot units for general use through joint planning and evaluation seminars. Learning Networks – a Model for Interaction and Cooperation Learning networks can be examined through the interactive relationships between the various parties involved and their mutual cooperation. The main types of interaction and cooperation occur within companies, between companies, between companies and expert organizations, and between expert organizations (figure 3). In the following, the last two types will, however, be examined as one entity. Figure 3. Types of interaction and cooperation in learning networks. Expert Expert organization A organization B Company A Company B
12 Interaction within the Company Opportunities for different personnel and vocational groups to contribute to planning and implementing processes of change in companies, and the impact of these changes on the work, working conditions and terms of employment of these different groups have always been key issues in work organization development programmes and projects. The different approaches place different emphasis on the importance of democracy in the values and principles which guide processes of change, on the one hand, and the work and HRM practices which emerge as a result of these processes, on the other. One way of conceptualizing this difference is to talk about values and principles which guide both the company’s production system and also its development system (Colbjørnsen & Falkum 1998). These production and development systems are governed by different types of logic. However, a company’s production and development systems could hardly operate for very long governed by diametrically opposed values and principles – at least, not in a Nordic workplace environment. The pace of change in companies’ operating environment has accelerated, and the development needs and challenges that companies face today have become increasingly complex. This puts pressure on companies to ‘compress’ time in development operations. Instead of individual, conservative and strictly limited experiments, progress now needs to be made over a broad front, comprising several in-house functions and applying to a high proportion of the whole organization. Meanwhile, normal production operations, development measures and support functions such as personnel training also have to be compressed ever closer in terms of time, and should ideally be simultaneous. This demand for the ‘compression’ of time means that the production system and the development system are beginning to merge. This is evident in the organization of development measures, in that the importance of production teams and various development and project groups which allow direct worker participation is growing, at the expense of more representative forms of participation (Gustavsen et al. 1996; 2001). As a consequence, representative arrangements in development are increasingly taking on a role in which they define the rules governing general employee participation in development and deal with the impact of development action on terms and conditions of employment. This does not necessarily mean reducing the significance of representative participation; it is more a case of redefining its role. Following this trend, innovation-promoting work organization development can improve employee opportunities to play a proactive part in creating solutions which have an impact on their work, working conditions and terms of employment. One of the reasons why the opportunity for direct participation in change processes is becoming more important for employees in a knowledge-intensive and networked production environment is that tacit knowledge is taking on increasing significance as a source of competitive edge and, by extension, as part of employees’ required qualifications. Since tacit knowledge is accumulated from doing, using and social interaction, with shared experiences as the core, opportunities to participate directly in planning and implementing change are more critical than ever for the preservation of individual employees’ own labour market status (Alasoini 2002). Interaction between Companies There can be many different obstacles and barriers to development cooperation between companies. Those which are part of the same value chain usually find it easier to define a
13 shared target for their operations, but the road leading up from arm’s-length bargaining inside the value chain to partnership in a learning network could be long and rocky. The VAVE Network, described above, is an example of a development story of a group of companies which succeeded here. Even in this case, however, success was not considered automatic from the start, since some suppliers joined the project with low expectations or even doubts. An important milestone in overcoming these reservations was the project’s success in the companies’ first joint development project (joint acquisition of paints), a scheme which did not yet require any particular mutual trust between the companies and which was furthermore based on a clear win/win situation for all involved. The principles applied in implementing the project helped create an open atmosphere based on mutual trust for the exchange of information and cooperative action between the companies during the project. They were (Anttila et al. 2002): • The project was primarily implemented using the multilateral development method. • The project was systematically implemented in stages, from defining the networking strategy to concrete subprojects and evaluation of their implementation. • The project created a multi-layered development organization and infrastructure for its development operations (network seminars, development groups, contact persons on the company level, research team). • The general guidelines for the project and the vision and strategy of the network were defined in a cooperative and participatory manner. • On both the network and company level, the projects involved a number of concrete subprojects aimed at improving operating methods, using a method based on cooperation and learning by doing. A natural factor which fosters cooperation among companies is if they operate in the same geographical area. Horizontality and – as a horizontal criterion – this geographical proximity are used as the main networking principle in the ‘module’ and ‘development coalition’ concepts of the latest Norwegian development programmes, Enterprise Development 2000 and Value Creation 2010 (Gustavsen 2001). Much the same fundamental principle has been applied in recent work organization development in Sweden, where for instance the European Social Fund’s Objective 4 programme in 1995-1999 was more of a work organization development programme than a training programme (unlike the case in Finland), being based on regional partnerships. In Sweden, the debate about the ‘third task’ of the universities has also emphasized the significance of the regional dimension both in cooperation between companies and between companies and universities (Eriksson (Ed.) 2002; Svensson et al. (Ed.) 2002). Learning networks can be built on many kinds of motives which unite companies. Due to the uneven geographical distribution of both companies and expert organizations, purely regionally based learning networks will probably be rare in countries with small populations such as Finland. Experiences from FINWDP suggest that both vertical and horizontal networks can be successful as learning networks. The ability of vertical networks to produce generative learning (which is the aim of learning networks in the final analysis) can be severely restricted if the value chain contains one company which is far stronger than the others (a principal supplier, final assembly business, owner of the brand or the like), whose interests give a one-sided slant to the development targets set for the whole network. Meanwhile, a potential danger for generative learning in horizontal networks emerges if the companies involved are too similar in terms of culture. The same problem may apply to sectoral networks to some extent. Another general problem in setting up such a network in the
14 first place could be that companies in the same sector in a small country are quite likely to be competitors. Interaction between Companies and Expert Organizations and between Expert Organizations Cooperation between companies and various types of expert organization may also face various questions and obstacles. In this respect, companies could be roughly divided into four categories based on the research findings of Nieminen and Kaukonen (2001): (1) companies which engage in development operations purely on their own, (2) companies which mainly pursue development with their client companies, equipment suppliers, subcontractors and materials suppliers, (3) companies which also do this with consultancy firms and development agencies and with research units which offer readily applicable technological or other expertise, and (4) companies which furthermore pursue development cooperation with universities and other research and education institutions. The study indicated that the degree of networking in development activities found at these companies shows a clear positive correlation with their financial investments in R&D. Nieminen and Kaukonen’s research found that the four most common obstacles to cooperation with universities stated by companies were ‘lack of time’ (considered by 50% to be a very big or fairly big obstacle), ‘not aware of cooperation potential’ (45%), ‘don’t have resources to pay for services’ (36%) and ‘different time scope of operation’ (35%). The first obstacle was thus very common and also difficult to interpret. The following two obstacles can be solved with the help of information provision and financial support from work organization development programmes. The fourth obstacle mainly derives from differences in operational logic between researchers and practical actors. The same problem also emerged in the evaluation report on the Enterprise Development 2000 programme (Oscarsson (Ed.) 1999). The challenge for programmatic work organization development aiming to promote innovation is that development programmes specifically need to promote cooperation between research units and companies, but many companies are very reluctant to enter into this type of cooperation. It is not enough if research units simply begin to operate more like consultancy firms vis-à-vis companies. The evaluation report on the Enterprise Development 2000 programme came up with two recommendations for strengthening development cooperation between companies and research units: first of all, work organization development programmes and projects within them should be able to use specialists with expertise from different areas flexibly, including also engineering, systems design, business administration, etc. Similarly, it might prove useful in many technology development programmes and projects to apply a networked approach based on dialogue as in the Enterprise Development 2000 programme, and the expertise of researchers with a background in social sciences. The second recommendation emphasized the application of a problem-oriented interdisciplinary research approach in solving complex problems. Both recommendations for strengthening the cooperation between companies and research units thus also indirectly focused on strengthening the cooperation between research units. One possible solution would be to strive to strengthen cooperation between various expert organizations such as universities, polytechnics or the like, consultancy firms and development agencies, each of which have a different approach to the generation,
15 dissemination and application of scientific knowledge. In such a case, the different expert organizations might play different roles in the network, and together they would be able to offer participating companies a more multifaceted and versatile range of expertise than models involving only one expert organization. Cooperation between universities, polytechnics and consultants could then also support each of the expert organizations involved in developing its own expertise. This type of coalition between expert organizations has in fact already been formed in some FINWDP network projects, e.g. TEL LAPPI. In future, forming such coalitions and studying how they work could become an increasingly important aim and function of work organization development programmes. References Alasoini, T. (2001), “Promoting network-based organizational innovations: a new approach in Finnish labour and technology policies”, International Journal of Technology Management, Vol. 22, Nos. 1/2/3, pp. 174-188. Alasoini, T. (2002), “Workplace Development Programmes in the Knowledge-Based Economy”, in Svensson, L., Brulin, G., Ellström, P.-E. and Widegren, Ö. (Ed.), Interaktiv forskning – för utveckling av teori och praktik, Arbetslivsinstitutet, Stockholm, pp. 57-70. Antila, J. and Ylöstalo, P. (1999), Functional Flexibility and Workplace Success in Finland, Finnish Ministry of Labour, Helsinki. Anttila, J.-P., Heiska, K., Julkunen, P., Koivisto, T., Kulmala, H.I., Lappalainen, I., Lehtinen, H., Mikkola, M. and Paranko, J. (2002), VAVE – vahvuutta verkostosta, Finnish Workplace Development Programme, Helsinki. Bessant, J. and Tsekouras, G. (2001), “Developing learning networks”, AI & Society, Vol. 15, Nos. 1/2, pp. 82-98. Bresnahan, T.F., Brynjolfsson, E. and Hitt, L.M. (2002), “Information technology, workplace organization, and the demand for skilled labor: firm-level evidence”, Quarterly Journal of Economics, Vol. 117, No. 1, pp. 339-376. Brödner, P. and Latniak E. (2002), Sources of Innovation and Competitiveness: National Programmes Supporting the Development of Work Organisation, European Commission, Brussels. Colbjørnsen, T. and Falkum, E. (1998), “Corporate Efficiency and Employee Participation”, in Gustavsen, B., Colbjørnsen, T. and Pålshaugen, Ø. (Ed.), Development Coalitions in Working Life: The ‘Enterprise Development 2000’ Program in Norway, John Benjamins, Amsterdam – Philadelphia, pp. 35-54. Cole, R.E. (1993), “The Leadership, Organization and Co-Determination Programme and Its Evaluation: A Comparative Perspective”, in Naschold, F., Cole, R.E., Gustavsen, B. and Van Beinum, H. (Ed.), Constructing the New Industrial Society, Van Gorcum – Swedish Center for Working Life, Assen/Maastricht – Stockholm, pp. 121-132. Den Hertog, J.F. and Schröder, P. (1989), Social Research for Technological Change: Lessons from National Programmes in Europe and North America, MERIT, Maastricht. Eriksson K. (Ed.) (2002), Forskningssamverkan och nya former av kunskapsbildning: sammanställning av bidrag till konferensen Högskolor och samhälle i samverkan, Högskolan i Halmstad, 9-11 maj 2001, Högskolan i Halmstad, Halmstad. Fricke, W. (1994), “Scientific Knowledge, Social Change and Action Research”, in Kauppinen, T. and Lahtonen, M. (Ed.), National Action Research Programmes in the 1990s, Finnish Ministry of Labour, Helsinki, pp. 47-69. Gjerding, A.N. (1999), “Flexibility in Denmark”, in NUTEK, Flexibility Matters – Flexible Enterprises in the Nordic Countries, NUTEK, Stockholm.
16 Gustavsen, B. (2001), “Towards social partnership: trends in Norwegian workplace development programs”, Concepts and Transformation, Vol. 6, No. 2, pp. 195-208. Gustavsen, B., Finne, H. and Oscarsson, B. (2001), Creating Connectedness: The Role of Social Research in Innovation Policy, John Benjamins, Amsterdam – Philadelphia. Gustavsen, B., Hofmaier, B., Ekman Philips, M. and Wikman, A. (1996), Concept-Driven Development and the Organization of the Process of Change: An Evaluation of the Swedish Working Life Fund, John Benjamins. Amsterdam – Philadelphia. Kumar, P. (2000), Rethinking High-Performance Work Systems, IRC Press, Kingston, Ontario. Lewis, W.W., Palmade, V., Regout, B. and Webb, A.P. (2002), “What’s right with the US economy”, McKinsey Quarterly, No. 1, pp. 30-40. Lillrank, P. (1995), “The transfer of management innovations from Japan”, Organization Studies, Vol. 16, No. 6, pp. 971-989. Nahapiet, J. and Ghoshal, S. (1998), “Social capital, intellectual capital and the organizational advantage”, Academy of Management Review, Vol. 23, No. 2, pp. 242-266. Naschold, F. (1993), “Organization Development: National Programmes in the Context of International Competition”, in Naschold, F., Cole, R.E., Gustavsen, B. and Van Beinum, H. (Ed.), Constructing the New Industrial Society, Van Gorcum – Swedish Center for Working Life, Assen/Maastricht – Stockholm, pp. 3-119. Nieminen, M. and Kaukonen, E. (2001), Universities and R&D Networking in a Knowledge- Based Economy: A Glance at Finnish Developments, Sitra, Helsinki. Oscarsson, B. (Ed.) (1999), Benchmarking of Enterprise Development 2000: An Impact Evaluation and a Comparative Analysis of Programme Design, Research Council of Norway, Oslo. Schienstock, G. and Hämäläinen, T. (2001), Transformation of the Finnish Innovation System: A Network Approach, Sitra, Helsinki. Science and Technology Policy Council of Finland (2003), Knowledge, Innovation and Internationalisation, Edita, Helsinki. Svensson, L., Brulin, G., Ellström, P.-E. and Widegren, Ö. (Ed.) (2002), Interaktiv forskning – för utveckling av teori och praktik, Arbetslivsinstitutet, Stockholm. Tell, J. (2001), Organising University-Led Learning Networks among Small-Enterprise Managers, Chalmers University of Technology, Gothenburg. Virkkunen, J. (2002), ”Konseptien kehittäminen osaamisen johtamisen haasteena”, in Virkkunen, J. (Ed.), Oppimisen johtaminen muutoksessa: ideoita ja kokemuksia toisen sukupolven knowledge managementin kehittelystä, Finnish Workplace Development Programme, Helsinki, pp. 11-49. Wareham, J. and Gerrits, H. (1999), “De-contextualising competence: can business best practices be bundled and sold?”, European Management Journal, Vol. 17, No. 1, pp. 39- 49.

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